How Naysayers See the World Trade Organization

Public Citizen’s Lori Wallach is no fan of the World Trade Organization. But her mischaracerizations of how that body operates require correcting. Wallach published this piece on April 9 on the Huffington Post blog under the title, “WTO Orders U.S. to Dump Landmark Obama Youth Anti-Smoking Law.” Here are some excerpts followed by commentary.

Behind closed doors in Geneva, a World Trade Organization (WTO) tribunal issued a final ruling ordering the U.S. to dump a landmark 2009 youth anti-smoking law.

However, this is what the last paragraph of the WTO Appellate Body report actually says:

The Appellate Body [the highest “court” in the WTO] recommends that the DSB [WTO Dispute Settlement Body] request the United States to bring its measure, found in this Report, and in the Panel Report [the Panel is the equivalent of a lower court] as modified by this Report, to be inconsistent with the TBT Agreement [Technical Barriers to Trade], into conformity with its obligations under that Agreement. (My emphasis.)

The decision – just like U.S. court decisions are made – was made behind closed doors in the sense that the judges probably evaluated the merits of the claims against the texts of the agreements in the comfort of their own offices with their doors closed. The Appellate Body report, though, which includes the rationale for each decision in the report, is available right here, to the public. Likewise, the original Panel report is available here, as is plenty of other relevant information.

Contrary to the characterization that Wallach and other anti-globalistas have been trying to paint for years, the WTO is not some faceless bureaucracy issuing edicts that run roughshod over national sovereignty and local laws. The WTO has no special power to compel any member state to do anything. Contrary to Wallach’s claim that a WTO “Tribunal” (sounds like a military junta, no?) “ordered” the United States to “dump” a “landmark” anti-smoking law, the WTO Appellate Body merely requested (see above) that the United States bring a specific clause of the law into conformity with U.S. treaty obligations. WTO Panels and the AB only recommend or request.

A WTO dispute panel in this case and, subsequently, the Appellate Body, found that the law’s prohibition on sales of certain cigarettes – namely, clove-flavored – but not on others – namely, menthol-flavored – constitutes a violation of the principle of “national treatment,” which is a bedrock principle of the multilateral trading system that asserts that foreign producers must be afforded the same standards and rules as domestic producers.

Wallach continues:

[The] U.S. law was designed to reduce teen smoking by banning “starter flavorings,” since tobacco firms had begun marketing flavors like cola, chocolate, strawberry and clove. The 2009 law forced U.S. firms to cease sales of these products, whether imported or domestically produced (my emphasis).

U.S. firms may have begun marketing cola, chocolate, and strawberry cigarettes, but clove cigarettes, like menthol cigarettes, had been a fixture among U.S. tobacco products since the 1930’s. The WTO did not rule that the United States cannot have an anti-smoking law – only that that law was not being applied evenhandedly to domestic as well as foreign companies. By banning clove cigarettes, which have been sourced principally from Indonesia over the years, but not menthol cigarettes, which are produced primarily in the United States, the U.S. law discriminates against producers from another country – namely, Indonesia.

Wallach:

The WTO’s ruling against banning the sale of flavored cigarettes isn’t the only example of its attack on consumer protection and health laws. The U.S. has filed WTO appeals on two other U.S. consumer laws – U.S. country-of-origin meat labels and the U.S. dolphin-safe tuna label – both were slammed by lower WTO tribunals in the past six months.

Of course, the WTO did not rule against banning the sale of flavored cigarettes. The law could be made WTO compliant by extending the ban to include menthol, in which case it might be more defensible as a measure to protect youth health. Or the law can be changed so that both clove and menthol cigarettes are not banned.

The bottom line is that there are many ways to pursue public health and safety and consumer protection that don’t, coincidentally, punish foreign firms to the benefit of domestic ones (which is the narrow area of concern to the WTO). In the dolphin-tuna and the country of origin cases, mentioned, there are better, WTO-compliant ways to achieve the implicit public policy objectives.

But, as Wallach sees it:

[I]n short order we could see the WTO hating on Flipper, feeding us mystery meat and getting our kids addicted to smoking.

This might be good marketing for Public Citizen and its anti-trade agenda, but it doesn’t advance public understanding of the issues.